This Week in Compliance: Two Former Oil Executives Convicted over USD 45 Million Kickbacks

by GAN Integrity on October 26th, 2018

This Week in Compliance: Two Former Oil Executives Convicted over USD 45 Million Kickbacks

Business

Facebook fined GBP 500,000 over Cambridge Analytica scandal: The UK’s Information Commissioner’s Office (ICO) fined social media giant Facebook half a million pounds for allowing third-party developers to access user information without sufficient consent. The decision today upholds the ICO’s initial decision from July. The fine represents the maximum possible fine under the old data protection laws, since the conduct pre-dates the introduction of the GDPR. Under the GDPR, the company could have been fined up top GBP 1.2 billion. The fine comes after the ICO concluded that Facebook had failed to put in place suitable checks on developers using the platform. Facebook currently faces a separate investigation in Ireland over an unconnected data breach in September of this year.

Two former oil executives found guilty in USD 45 million kickback scheme: Osman Shahenshah, former CEO, and Shahid Ullah, former COO of now-defunct oil company Afren were found guilty of fraud and money-laundering this week by a London court. The two executives took USD 45 million from a secret deal made with a business partner in Africa. USD 17 million was split between the two and the rest of the money went to some employees at the business partner. The kickback was part of a USD 300 million deal in Nigeria in which they failed to disclose that 15 percent of the deal would be transferred to a shell company in the Caribbean owned by the two culprits. The scheme was concocted after the two failed to convince their shareholders to increase their pay. An internal investigation uncovered the fraud in 2014; the SFO started a criminal investigation in June 2015 after the company collapsed. A sentencing hearing is scheduled for October 29th.

Wells Fargo pays USD 65 million to resolve “cross-selling” fraud claims in New York: New York’s General Attorney will settle “cross-selling” fraud claims with Well Fargo bank in exchange for a USD 65 million penalty. The cross-selling strategy involved a push to get existing customers to buy more of the bank’s products through fraudulent practices including using fake customer accounts. New York Attorney General Barbara Underwood said in a statement that the misconduct was widespread within the bank and involved every level of management, misleading both customers and investors. The bank has overhauled its management and paid hundreds of millions of dollars in regulatory fines and settlements since the cross-selling scandal broke in 2016.

Government

U.S. Navy commander jailed in Fat Leonard case: Troy Amundson, a former U.S. Navy commander received a 30-month prison sentence last Friday for accepting bribes from “Fat Leonard”, a contractor based in Singapore running Glenn Defense Marine Asia (GDMA) in exchange for providing sensitive information on ship movements and port calls. Amundson coordinated the U.S. Navy’s joint military exercises with its allies between 2005 to 2013. While in that post, Amundson accepted dinners, drinks, and the services of prostitutes from Fat Leonard, properly known as Leonard Glenn Francis. Francis pled guilty to related charges in 2015, but is still awaiting sentencing. To this date, 33 defendants, including many high-ranking officers in the Navy’s Pacific command, have been charged in the corruption scandal.

Former head of Chinese internet regulator pleads guilty to corruption: Lu Wei, the former head of China’s internet regulator, known as the Cyberspace Administration of China (CAC), pleaded guilty to taking bribes amounting to USD 4.6 million. Lu was accused of abusing his position by taking bribes in exchange for helping others. The court heard that Lu’s corruption spanned his decades-long career. Lu was considered the public face of China’s draconian internet censorship, sometimes referred to as “The Great Firewall”. Lu was abruptly removed from his position in June 2016 and was officially put under investigation in November 2016. In February, Lu was expelled from China’s Communist Party. A court date has not been set yet for Lu’s sentencing.

Building a comprehensive structure for your compliance program is essential to effectively and efficiently mitigate risk. And while risks vary from one company to another based on industry, location, and partners – thereby disqualifying any one-size-fits-all compliance program – the underlying structure of a program can, to a reasonable extent, be broken down into a set of components.